Reliance on a Tax Professional or IRS Advice as Reasonable Cause

If an IRS penalty followed advice you got from your tax preparer or from the IRS itself, you can ask the agency to remove it. Reasonable cause penalty relief for relying on tax advice is available when the advice went to a substantive tax question rather than a routine deadline, when you gave the advisor complete information, and when you can document what you were told.¹ Written advice from the IRS itself gets the strongest treatment: the law requires abatement. Everything else is judged case by case.

Relying on a Tax Professional

The Supreme Court split professional reliance into two categories in United States v. Boyle. Advice on a substantive question of tax law, such as whether a payment is taxable or whether you qualify for a deduction, can support reasonable cause if the advice turns out to be wrong. Handing your accountant a deadline and hoping they meet it cannot. The Court reasoned that you don’t need to be a tax expert to know a return has a due date, but you have no realistic way to second-guess a CPA’s opinion on whether income is reportable.²

That distinction is where most professional-reliance claims fail. If your accountant forgot to e-file, the penalty stands. If a preparer told you an extension to file also extended your payment deadline, the IRS expects you to have known better; that’s a basic scheduling question, not a substantive one.

What You Have to Show

Courts and the IRS have distilled the defense into three requirements, drawn from the Rohrabaugh framework the Supreme Court cited approvingly in Boyle.²

The advisor was competent for the tax issue. Usually that means a CPA, enrolled agent, or tax attorney with active credentials. A bookkeeper or general financial planner who isn’t qualified to give tax advice will not satisfy this element.³
You gave full disclosure. If you left out a side income stream or omitted documentation about a transaction, the defense collapses no matter how good the advice was.
You relied in good faith. You actually followed the advice, and you had no reason to doubt it.

An advisor with a financial stake in the outcome of the advice generally won’t qualify, and neither will one whose expertise doesn’t match the question you asked.

Relying on Written IRS Advice

When the IRS itself puts wrong advice in writing, the agency must abate any resulting penalty. IRC 6404(f) is not discretionary.⁴ Two conditions apply. The written advice must have responded to a written request you submitted, and the request must have laid out accurate and complete facts. Leave out something important and the protection falls away.

Treasury regulations tell you exactly what to send. File Form 843 with copies of your original written request, the erroneous written response, and any tax adjustment report showing the resulting penalty. Write “Abatement of penalty or addition to tax pursuant to section 6404(f)” across the top.⁵

Relying on Oral IRS Advice

The mandatory-abatement statute only covers written advice. Oral advice from an IRS phone representative or walk-in employee is handled under internal policy, and relief is discretionary.⁶ Because it’s discretionary, documentation carries the whole weight of the claim. The IRS weighs whether you exercised ordinary care in relying on what you were told, whether the advice actually related to the penalty, your prior compliance record, and whether the correct answer was available in published forms or instructions.

Useful records include the question you asked, the specific guidance you received, how the contact happened (phone, walk-in, other), the date, and the IRS employee’s name. If you’re calling the IRS about a complicated question, take notes during the call. Get the representative’s name and employee ID. Reconstructing the conversation months later, without contemporaneous notes, rarely persuades an examiner.

Which Penalties Reliance Can Reach

Reasonable cause covers most of the penalties you’re likely to face. The failure-to-file penalty runs up to 5 percent per month and caps at 25 percent of the unpaid tax; the failure-to-pay penalty runs 0.5 percent per month with the same 25 percent cap.⁷ Accuracy-related penalties under IRC 6662 (substantial understatement, unreasonable positions) can be removed if you show reasonable cause and good faith.⁸

One boundary matters here. The estimated tax penalty cannot be removed through reasonable cause.¹ If an accountant miscalculated your quarterly estimates, this is not the path. Reasonable cause is also unavailable for accuracy-related penalties tied to certain reportable transactions and specified disallowed items.⁸

Check First-Time Abate Before Building a Reliance Case

Before assembling documentation, check whether First-Time Abate (FTA) applies. It’s a purely administrative waiver that needs no explanation and no proof, and the IRS will apply it automatically if you request reasonable cause but meet the FTA criteria instead.⁹ FTA reaches three penalties: failure to file, failure to pay, and failure to deposit. To qualify you need a clean three-year record before the penalty year: all required returns filed, and no penalties during that window (or any that were assessed removed for a reason other than FTA).

This is often the fastest way out, especially if your reliance argument is close to the line or your documentation is thin.

How to File the Request

For reliance claims, submit the request in writing. Form 843, Claim for Refund and Request for Abatement, is the standard form.¹⁰ Line 8 is where you explain why the claim should be allowed.¹¹ Give the IRS a clean narrative: what advice you received, from whom, when, what information you gave the advisor, and how the advice caused the specific penalty on the specific tax period.

Attach supporting material. For a professional-reliance claim, that means engagement letters showing scope of work, correspondence with the advisor, and any written acknowledgment from the professional about the error. For a written-advice claim against the IRS, include the copies the regulation lists: your original request, the IRS response, and the adjustment report.⁵

Mail the package to the service center address printed on your penalty notice. Certified mail with a return receipt gives you a dated record if timing questions come up later.

If the IRS Denies the Request

A denial letter will explain the reasons and lay out your appeal rights. You generally have 30 days from the date of the letter to request a conference with the IRS Independent Office of Appeals, but check the letter for the exact deadline.¹² Appeals officers are independent from the examiners who denied the original request and have settlement authority. Prepare a written protest explaining why you disagree, and send it to the address in the rejection letter.¹³ Use the appeal to add anything the original submission missed: a stronger causal link, additional records from the advisor, or documentation of the IRS interaction you didn’t have the first time.

1
Internal Revenue Service. Penalty Relief for Reasonable Cause
2
Legal Information Institute. United States v. Boyle
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Internal Revenue Service. Choosing a Tax Professional
4
Office of the Law Revision Counsel. 26 USC 6404 – Abatements
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eCFR. 26 CFR 301.6404-3 – Abatement of Penalty or Addition to Tax Attributable to Erroneous Written Advice by the Internal Revenue Service
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Internal Revenue Service. IRM 20.1.1 Introduction and Penalty Relief
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Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax
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Office of the Law Revision Counsel. 26 USC 6664 – Definitions and Special Rules
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Internal Revenue Service. Administrative Penalty Relief
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Internal Revenue Service. About Form 843, Claim for Refund and Request for Abatement
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Internal Revenue Service. Form 843 – Claim for Refund and Request for Abatement
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Internal Revenue Service. Penalty Appeal
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Internal Revenue Service. Preparing a Request for Appeals